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Chapter 3
Managing in a Changing Global Environment
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Outside stakeholders include customers, distributors, unions, competitors, suppliers, and the government
The organization must engage in transactions with all outside stakeholders to obtain resources to survive
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Stable environment: forces that affect the supply of resources are predictable Unstable (dynamic) environment: it is difficult to predict how forces will change that affect the supply of resources
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The organization is located in a poor country or in a poor region of a country There is a high level of competition, and organizations are fighting over available resources
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It has to exert influence over other organizations so that it can obtain resources It must respond to the needs and demands of the other organizations in its environment
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Symbiotic interdependencies: interdependencies that exist between an organization and its suppliers and distributors Competitive interdependencies: interdependencies that exist among organizations that compete for scarce inputs and outputs
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Reputation: a state in which an organization is held in high regard and trusted by other parties because of its fair and honest business practices Reputation and trust are the most common linkage mechanisms for managing symbiotic interdependencies
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Make outside stakeholders inside stakeholders Interlocking directorate: a linkage that results when a director from one company sits on the board of another company
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An increasingly common mechanism for managing symbiotic (and competitive) interdependencies The more formal the alliance, the stronger and more prescribed the linkage and tighter control of joint activities
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Keiretsu: a group of organizations, each of which owns shares in the other organizations in the group, that work together to further the groups interests
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New organization better able to resist powerful suppliers and customers Normally involves great expense and problems managing the new business
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Collusion: a secret agreement among competitors to share information for a deceitful or illegal purpose May influence industry standards Cartel: an association of firms that explicitly agrees to coordinate their activities May influence price structure of market
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Tketiciler Birlii Bakan Vekili Mehmet Muta ahin ''Et fiyatlar zerinden haksz kazan elde etmeye alan firmalar Rekabet Kuruluna ikayet ettik'' dedi.
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Bounded rationality: refers to the limited ability people have to process information Attempt to exploit forces or stakeholders Specific assets: investments that create value in one particular exchange relationship but have no value in any other exchange relationship
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Prisoner A Betrays
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Organizations are exchanging nonspecific goods and services Uncertainty is low There are many possible exchange partners
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Organizations begin to exchange more specific goods and services Uncertainty increases The number of possible exchange partners falls
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Bringing transactions inside the organization minimizes but does not eliminate the costs of managing transactions
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Locate the sources of transaction costs that may affect an exchange relationship and decide how high the transaction costs are likely to be Estimate the transaction cost savings from using different linkage mechanisms Estimate the bureaucratic costs of operating the linkage mechanism Choose the linkage mechanism that gives the most transaction cost savings at the lowest bureaucratic cost
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Keiretsu
Japanese system for achieving the benefits of formal linkages without incurring its costs
Affords substantial control over the exchange relationship Avoids bureaucratic cost of ownership and opportunism
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Franchising
A franchise is a business that is authorized to sell a companys products in a certain area The franchiser sells the right to use its resources (name or operating system) in return for a flat fee or share of profits
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Outsourcing
Moving a value creation that was performed inside the organization to outside companies Decision is prompted by the weighing the bureaucratic costs of doing the activity against the benefits
Increasingly, organizations are turning to specialized companies to manage their information processing needs
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